CERTIFIED LENDERS

Certified lenders are banking institutions that qualify for inclusion in a
streamlined lending program maintained by the Small Business
Administration. Certified lenders are also institutions that have been
heavily involved in regular SBA loan-guaranty processing and have met
other criteria stipulated by the SBA. When a lender is approved as a SBA
certified lender, its applications are given priority by the Small
Business Administration. The lender receives a partial delegation of
authority and is given a three-day turnaround by the SBA on the loan
applications (they also have the option of using regular SBA loan
processing). In the late 1990s, certified lenders accounted for nearly a
third of all SBA business loan guarantees.

Lending institutions can become a part of the SBA's Certified
Lender Program (CLP) in one of two ways: 1) It may make a request to an
SBA field office for consideration for the program, or 2) An SBA field
office may nominate the lender without prompting from the institution. SBA
district directors approve and renew a lender's status as part of
the CLP. Primary considerations in determining whether the lender will
qualify include:

●
Whether the applicant has the ability to process, close, service, and
liquidate loans.

●
Whether the applicant has a good performance history with the SBA (i.e.,
has it submitted complete and accurate loan guarantee application packages
in the past?).

●
Whether the applicant has an acceptable SBA purchase rate.

●
Whether the applicant seems able to work amicably with the local SBA
office.

If a lending institution makes an application for inclusion in the CLP,
only to be turned down, it may make an appeal to the AA/FA, whose decision
is final.

According to the Small Business Administration, the AA/FA may suspend or
revoke CLP status upon written notice providing the reasons at least 10
business days prior to the effective date of the suspension or revocation.
Lending institutions may lose their status for a variety of reasons,
including poor loan performance record; failure to make the required
number of loans; violations of applicable statutes, regulations, or
published SBA policies.

Similar to certified lenders are preferred lenders. Banks that qualify as
preferred lenders are among the best SBA lenders and enjoy full delegation
of lending authority in exchange for a lower rate of guaranty. In other
words, they do not have to run an SBA loan past the SBA before approving
it. This lending authority has to be renewed every two years, and the
lender's portfolio is examined by the SBA on an annual basis.
Preferred lenders are also required to employ two SBA-trained loan
officers. Preferred loans accounts for about ten percent of all SBA loans.

FURTHER READING:

Buchanan, Doug. "SBA Fretting Over Adequacy of Credit to Small
Companies."
Business First-Columbus.
September 17,1999.

Heath, Gibson.
Doing Business with Banks: A Common Sense Guide for Small Business
Borrowers.
DBA/USA Press, 1991.

Jayaratne, Jith, and John Wolken. "How Important are Small Banks to
Small Business Lending?"
Journal of Banking and Finance.
February 1999.